Texas Healthcare Company Gave Executives Millions Before Filing For Bankruptcy

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Troubled Texas company, Steward Health Care, gave millions of dollars in compensation to more than a dozen executives in the months before company filed for Chapter 11 bankruptcy.

Despite the company's financial troubles, many executives enjoyed substantial salaries and bonuses. Court documents and new statements from Steward reveal that executives were also reimbursed for significant payments to their personal accounts.

Ralph de la Torre, Steward's chairman and CEO, received $5.2 million, which included a salary of about $3.8 million, expense reimbursements, and $161,000 for “non-business flights.”

Regional president Brian Dunn received $3.7 million. Joseph Weinstein, a high-ranking physician, was paid $2.8 million.

Per Steward spokesperson Josephine Martin, most of Weinstein's payment was reimbursement for his personal expenses incurred to support the company. “He put hundreds of thousands of dollars in vendor payments on a personal credit card to help patients and keep hospitals running,” Martin stated in an email.

Other executives who received at least $1 million include Mark Rich, Jeffrey Morales, and Michael Callum. Many executives also took home six-figure bonuses in the year before Steward filed for bankruptcy on May 6.

Dallas-based Steward, which operates 31 hospitals nationwide, including seven in Massachusetts, filed for bankruptcy after amassing billions of dollars in debt and failing to pay vendors for supplies and services. The company is also under federal investigation by the Department of Justice.

Vikas Saini, president of the Lown Institute, a health care think tank, raised concerns about the executive payouts amid Steward's financial struggles. “If they're scrambling, if creditors aren't getting paid, if suppliers aren't getting paid, if patient care is suffering,” Saini said, “then it really would be important to make sure this was not a corrupt practice in which people are siphoning money off a sinking ship in order to make sure they've feathered their own nest, to hell with anybody else.”

Filed in Houston's U.S. Bankruptcy Court, Steward's statements of financial affairs offer a unique window into a business that has long concealed its financial information. Steward and Massachusetts state officials have been embroiled in a protracted legal battle over Steward's persistent failure to disclose required financial information.

Steward’s Massachusetts hospitals and its physician network are scheduled to be sold at auction this month. Any bidder must negotiate terms with Medical Properties Trust (MPT), the real estate firm that owns Steward's hospital properties. Court documents show that Steward paid MPT about $239 million in the year before filing for bankruptcy.

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